December 31, 2009

More on the Md. property reassessments

Here's a gee-whiz real estate number of the day: $43.6 billion. That's the three-year decline in home values in just one-third of the state, according to Maryland's assessors. (The state's reassessment cycle touches a third of properties every year.)

Think about that -- $43.6 billion. In one-third of one state.

The biggest assessment drop came in Montgomery County, the most populous jurisdiction in the state, which saw an $11 billion decline. Prince George's County followed, down $6 billion, with Anne Arundel County close behind at $5 billion.

I checked a few reassessed streets, just for kicks, to see some of the homeowner impact.

One couple on Wyndhurst Avenue in Roland Park is getting a $107,000 decrease in assessed value come next year, which brings it below the $565,000 purchase price in 2007.

December 30, 2009

Renters feel the sting of foreclosure

It used to be a largely unmeasured problem. But now we have some hard statistics on how often local renters are finding themselves caught up in foreclosure because their landlords fell behind.

It happens a lot.

Of the approximately 5,000 Baltimore properties starting the foreclosure process in the 12 months ending June 30, nearly 40 percent -- 1,900 -- were occupied by renters. That's according to the Baltimore Homeownership Preservation Coalition.

And the state Department of Housing and Community Development, which started a hot line in May for renters in this situation (877-775-0357), has been averaging almost 600 calls a month for help.

I have a story today on the subject, or more specifically about the seven-month-old Maryland law requiring lenders notify renters as they seek to foreclose, and the equally young federal law giving renters time post-foreclosure before lenders can order them out. (Attorneys working with tenants say that lenders, or their contractors, are frequently neglecting to mention this.)

The question I know some of you have is how often renters are innocent victims, and how often they contributed to the landlord's default by not paying. The state has interesting statistics on that topic:

Nine out of every 10 tenants who called the state hot line said they were current on their rent. Most said they had never been late.

"They want to sue for their rent money back," said Stephanie D. Cornish, program manager for the tenant-landlord counseling department.

That's not an option, she says. "You can't control what the person does with your money. ... There isn't any contractual agreement between you and the landlord that they're going to pay their mortgage."

On the other hand, you can sue for your security deposit back if it is not forthcoming. Though whether you'll be able to collect is another matter.

The result: smaller property-tax bills due next July ... unless the amount of your homestead credit is so large that a significant decrease isn't enough to affect your tab. In which case you'll actually see an increase as you continue to close the gap between the amount you're paying taxes on and what the state says your home is worth.

The homestead tax break, which all owner-occupiers qualify for after a full fiscal year in their homes, limits the annual property-tax increase you see. In Baltimore, for instance, the cap is 4 percent.

Thus, property-assessment decreases will most affect homeowners who bought in the last few years and the people who don't live in their properties, such as investors.

In the Baltimore metro area, the smallest residential property assessment decline came in the city -- down 5.5 percent -- and the largest in Howard County (down about 23 percent). Anne Arundel County fell almost 20 percent, Baltimore County almost 18 percent, Carroll County just under 22 percent and Harford County about 15 percent.

Allegany County was the only spot in the state with rising assessment values, though barely -- 0.1 percent.

December 28, 2009

What we earn vs. what we pay for homes

Reader and frequent commenter Darwin Rules (UPDATE -- not the frequent commenter who goes by that screen name, but another reader, oddly enough) wrote recently, "I am 34 years old, single, have an associates degree, $43,000 in my 401k, and make just under $50,000 per year. House prices need to come down for me to buy."

Real median hourly wages (adjusted for inflation) peaked in 1971. Household income is up since then, but that is only because of more women in the workforce (more dual earner households). In short, it takes two wage earners to maintain the same standard of living it used to take one wage earner to maintain.

Would someone care to explain why society would even want expensive housing? It is taken as a given that such an outcome is desirable and beneficial and the only debate is how to achieve such outcome. Why would anyone support policy that results in more of your income going to a necessity? That's the real question.

Update: Josh was writing from memory, but he double-checked his stats and reports that inflation-adjusted median hourly wages are about what they were in 1973 for men. (Women's wages are up.) Here's the useful wage-history link he sent my way.

The housing-market decade nears its end

The aughts -- or whatever you want to call 2000 to 2009 -- were in many ways the Decade of Real Estate. First the boom. Then the bust, and all the unpleasantness that came with it.

This decade changed the national perception of homeownership not once but twice. Most of us entered the decade thinking that buying a home was about having a place of our own to live, and probably a good investment besides. Halfway through, many -- many, many -- Americans saw homeownership as a no-lose speculation, an ATM that never ran out of cash, and why buy just one if you could leverage it for three more? And now here we are at the end of the '00s, and I've lost track of how many people have told me that they no longer see real estate as any sort of investment at all.

The bubble years also changed Baltimore's landscape, and those changes weren't erased by the bust. As my colleague Jill Rosen pointed out in a story about notable Baltimore-centric things that happened in the past 10 years, "stainless steel, granite, roof decks and parking pads" came into "such working-class bastions as Canton and Locust Point":

The decorator appointments cracked the neighborhoods' Formstone-encrusted hearts and lured a new breed of city dweller: younger, ambitious, professional.

Longtime residents shook their heads at the endless parade of yuppies and U-Hauls and watched, bewildered, as microbrew pubs replaced corner bars and boutiques moved onto Broadway and the Avenue - our Main Streets.

Just east of downtown, Baltimore's new fashionable neighborhood, Harbor East, was created from whole cloth - that and the imagination of H&S Bakery magnate John Paterakis. High-rise offices. Expensive condominiums. Hotels. Chic stores and restaurants. A movie multiplex.

So much concentrated action and corporate investment mixed with designer bags, fine wine and sushi that it effectively pulled downtown's center of gravity eastward.

As Rosen notes, Baltimore didn't get the multiple new downtown skyscrapers promised during better times -- or at least it hasn't gotten them yet -- but Harbor East is still Harbor East, and all those Canton rehabs are still there, too. (Vacant, perhaps, but there.)

Do you think that change was for the better? What do you expect the city (or 'burbs or the whole state) will look like when the bust is well and truly over? And what do you consider the most notable changes to the local landscape?

December 27, 2009

Gee-whiz and oh-geez numbers

$40 billion: The value of home equity loans and lines of credit made in the first nine months of 2009. (That's right -- less than one-tenth the '06 number.)

Infinity and beyond: The amount of taxpayer money the federal government is willing to spend on mortgage giants Fannie Mae and Freddie Mac. (OK, perhaps I'm overstating it a bit. But the Treasury Department did just eliminate the cap of $400 billion it had in place, setting off speculation that Fannie and Freddie had a gosh-awful last three months of the year. So far the companies have taken $111 billion from Uncle Sam.)

32 percent: The share of homes in the Baltimore metro area that sold in November after being on the market for 30 days or less.

10 percent: The decrease in asking price for the typical home on the market in the Baltimore metro area this month, compared with December 2008.

25 percent: The decrease in asking price for the typical home on the market in the Baltimore metro area this month, compared with December 2006.

$8,980,000: Sixth-highest asking price for a home on the market in the Baltimore metro area, according to real estate search engine Trulia. (The Annapolis "manor home," which overlooks water, has a theater, guest house and "3-car garage/artist studio.")

$1,010,000: Asking-price reduction on that manor home in August.

$5,900: Cheapest asking price for a home on the market in the Baltimore metro area, according to Trulia. (The Baltimore foreclosure has three bedrooms, one bathroom and its street number spray-painted on the front door.)

17,255, not counting shadow inventory: The number of Baltimore-area homeowners, as counted by Metropolitan Regional Information Systems' active inventory, who sure hope it's easier to sell in 2010 than it was in 2009.

Forty-one percent of you Wonk readers who took the poll this week expect prices will fall. Thirty-four percent of you think they'll rise, though not necessarily the amount First American is forecasting. And 24 percent of you believe prices will be flat.

(Among the bearish folks, the breakdown between those who expect a slight decrease vs. those who expect a significant one was about 60/40. Among the bulls, the most popular answer was an increase of about 4 percent, followed by less than 4 percent, and finally "I expect prices will increase more than that.")

And one reader wrote in an answer: "Depends where in MD. Balt = signif down. DC= up."

Once the rate subsidies expire, mortgage rates will be at least 6%, if not 7% since investors do not want to buy the paper. When the tax credit expires the end of next year, you will see prices fall again as people will be forced to pay more money out of pocket. The 3.5% down payment [required by FHA] has left many buyers with very little skin in the game. As more and more homeowners become underwater, you will see more strategic defaults which only make the problem worse. The housing bubble was over inflated by these very same programs. Instead of letting the free market correct itself, Gov't intervention is only trying to "re-inflate" a bubble that will once again burst.

The chief executive of real estate search engine Trulia, Pete Flint, noted some of the same issues when he recently made predictions for U.S. real estate in 2010:

* We will continue to see lots of volatility in the housing market through 2010 -- in for a double dip in the second half of 2010.

* Three major factors will contribute to the drop off in the second half of the year:

o Government intervention will disappear

o Shadow inventory will hit the market

o Mortgage rates will rise

* The tax credit has not created new demand, only pushed demand forward to the beginning of 2010.

* When the tax credit runs out, interest rates creep up and more inventory hits the market, we can expect prices to drop once again. For 2010, I predict:

o Sales volume to be flat compared to 2009 (5 to 5.5 million homes)

o Prices to drop another 5% to 10%

o Inventory levels to creep back up

o Mortgage rates move back into the range of 6%

How will the state of the housing market in 2010 affect you? What are you hoping to see?

December 24, 2009

Deck the halls, offices, yards and construction sites

Photo inside Advertising.com by Ayako Bingham

I don't know if it's the economy, the housing market or the cost of electricity, but there don't seem to be as many lit-up, decorated places this year. That might explain why only one reader -- the excellent Ayako Bingham of Advertising.com -- came through when I put out a call for photos of local holiday lights.

But between her photos, my snaps in Baltimore and Columbia and real estate editor Justine Maki's pictures in Ellicott City, we do have a cross-section of decorative efforts indoors and out, at both businesses and residences. It's no 34th Street in Hampden, but even a chilly construction site had a little tree.

It believes Maryland home prices will be a little more than 4 percent higher next October than they were in October of this year. (You read that right -- higher.) That's a bigger increase than the not quite 2 percent the company is projecting for the nation as a whole.

An increase would be a big turnaround from the 12 months ending in October 2009. First American estimates that Maryland home values dropped more than 11 percent, the sixth-highest decrease in the country. (Nevada was No. 1, down 24 percent, followed by Arizona, Florida, Michigan and Idaho.)

December 22, 2009

For 34th St., the most wonderful time of the year (to sell?)

700 block of 34th Street. Photo courtesy of Results 1 Realty.

Thanksgiving to New Year's is not a big time for home buying. Some sellers just take a break and try again later. Who wants to be marketing bricks and mortar when most people have food and presents on the mind?

Residents of Hampden's 34th Street, that's who. Two owners on the "Miracle on 34th Street" stretch -- the one lit up to high heaven and decorated to a fare-thee-well -- put their homes on the market this month.

I chatted with Sharon Burke, who owns the latter property, pictured above, and she said she thinks this is the best time of year to put a home on that street up for sale.

"We have approximately 45,000 people that come through 34th Street during the holidays," she said. "That's the estimate by the police. It's so many people on the street. More people get a chance to see it, I think, ... than we would be able to do during the regular [home buying season of] April or May."

Her son put his 34th Street house up for sale during the holiday season four years ago. He opened it up for people to come through the weekend the street was lit up, "and the following weekend, he had two bids," she said.

That was a very different sort of housing market, of course. But sales had just begun to slide in the Baltimore metro area at the end of 2005. The holiday timing, Burke is convinced, "was probably the biggest thing that helped him get his sale."

Burke has lived on 34th Street her whole life, minus a few years, and she's not moving. She's selling a second house. (Both are decorated.)

What she likes about life there: "It's a quiet neighborhood."

Not counting the end of the year, of course. But she said she really enjoys that, too.

Are there any other streets or neighborhoods you think benefit from a winter setting?

December 21, 2009

A home buyer's recommendation

We looked for our place for almost a year, and I'd say that on average, 70% of the Baltimore market is WAY overpriced.

In terms of what things are actually selling for in Baltimore right now, I don't think the market has all that much further to fall. But for those people that still have their houses listed at or just a little below 2007 prices - they aren't even close to reality.

A lot of buyers are told not to make low offers, but in many cases that's the only way to get the market moving. We offered 100K LESS than the 300K asking price on our place and eventually closed at just a few thousand dollars above our offer.

Forbes thinks Baltimore is 4th most overpriced

Baltimore is No. 4, behind Orlando, Miami and Jacksonville, all in Florida.

This list, unlike others I've seen, is about asking prices. Forbes ranked the 40 largest metro areas by looking at the percentage of homes with price reductions ("an indicator of inflated pricing"), days on the market, asking price vs. the price of homes when they went off the market and -- finally -- the Moody's Economy.com price forecast.

The subject of asking prices and whether they're too high (or really too high) is a perennial one among buyers. What's your perception of asking prices in the parts of the Baltimore metro area you're paying attention to? Have things improved in the last year? What impact has the $8,000 tax credit had, if any?

December 20, 2009

Greater Lauraville: a video

Bet you thought the hidden-gem-neighborhood project was over -- not least because I said so. But there was, actually, one remaining piece waiting for its finishing touches. And here it is: the freshly edited video I shot of Greater Lauraville while I was in the neighborhood.

Enjoy, I hope. Please forgive my imperfect camera work. And feel free to re-read the Lauraville profile, which happens to be in the real estate section today.

The strongest connection was for children under 12, middle-aged adults and lower-income residents. "For a few disease clusters the relation for children was especially strong, for example for vertigo ... and severe intestinal complaints," the authors wrote, adding: "The strongest relation for children was found for depression."

This got me wondering how much you all value (or don't value) parks, gardens and other green spaces. Have you chosen your homes with these things in mind? Perhaps you didn't and are regretting it? Or maybe -- counter to these researchers' findings -- you live near a park and are being driven crazy by the noise?

Do you think your community in general has too little, too much or just the right amount of green spaces?

VERY COOL UPDATE: Wonk reader Ben Hyman happens to have put together a map showing proximity to parks in the sense this study is talking about. Here it is:

He points out that tree-lined streets aren't included, and parks (which are) can sometimes be very small. "However, I think it's still interesting and ... shows how little of South Baltimore is park-accessible," he wrote me.

Have I mentioned lately how much I love you guys? It warms the cockles of my heart that I could blog about something so very specific and discover that a reader has already produced a map on the subject.

The Christian Science Monitor, reporting on Citigroup's decision, points out that this sort of move saves a lending institution from comparisons it might not like. For instance, Christmas Eve evictions on the other hand, "bonuses that the bankers are raking in" on the other.

Fewer interested in buying foreclosures: Forty-three percent of adults polled in a survey released this week by Trulia and RealtyTrac said they would be at least somewhat likely to buy a foreclosed home, down from 55 percent in May. Renters are more interested in buying a foreclosure than homeowners (57 percent vs. 38 percent). And -- not surprisingly -- more than 90 percent of prospective second-home buyers and investors are at least open to the idea of a foreclosure purchase.

For you fellow wonks: Just over 2,200 people were polled for the companies by Harris Interactive, which says no margin of error can be calculated because it was an online survey and not based on a probability sample.

Neighborhood-improvement nonprofits that have long worked to renovate properties and sell them to homeowners are now acquiring foreclosures to rent out instead -- especially in markets getting little interest from buyers:

With the economic crisis, soaring unemployment, tight credit, and millions of displaced homeowners, it is becoming clear that there is a need for more rental housing.

“There are no buyers,” says Deborah Younger of Detroit LISC. “Maybe we can sell 5 percent. [But] it’s about renters. We have 51 months of inventory. We have to get out of the notion that everyone is going to be a homeowner.”

December 17, 2009

Your neighborhood in lights

Photo of 34th Street in Hampden by Lloyd Fox / Baltimore Sun

If you like decorations on houses, this is your time of year. Hampden's Miracle on 34th Street gets most of the media attention locally for its homeowners' devotion to all things bright (and quirky -- see the hubcap tree above), but you can hardly go anywhere without seeing homes lit up for Christmas or another end-of-year holiday.

Share some with me, so I can share them with everyone.

Here's the idea: Snap shots of a decorated house or street in your neighborhood (or elsewhere in the area -- anything that catches your eye), and email the photos in jpeg form to jamie.smith.hopkins(at)baltsun.com by Tuesday the 23rd. I'll put up the results -- if any -- on Christmas Eve.

Holiday black humor

The housing slump, foreclosure crisis and constricted economy are omnipresent even -- or perhaps especially -- at this time of year, so I suppose I shouldn't be surprised about the Recession Gingerbread or the Default Carol.

The former is the brainchild of an artist who put together "Abandoned Gingerbread House Building Sites" in honor of all the abandoned actual homebuilding sites in Ireland. (You can find them in the U.S., too.) As gingerbread creator Andrew Salomone put it, they're "picturesque gingerbread-house decorations that will rot and eventually be thrown out much like the unfinished housing estates themselves." Joy to the world ...

Which brings us to "The 12 Months of Default." It warps "The Twelve Days of Christmas" to tell the tale of a couple sliding into foreclosure. ("On the 12th month of default, my true love said to me ... House sold at auction ... We need to vacate ... Cash for keys offer!" etc. etc.) It has, in a manner of speaking, a happy ending. Depending on your definition of happy.

Gust wrote on Dec. 10, "Just called IRS. Was told that there had not been a ruling on this and a ruling should be made within a few weeks."

Nikole wrote three days later, "I spent a great deal of time on the IRS website to verify the info on this blog as well as the article in the Baltimore Sun. When I could not find the info I called the IRS, the gentleman I spoke to said that the IRS had not weighed in on this matter and should have a decision within a few weeks. He also said he did not know what source the Baltimore Sun had gotten their information from."

The IRS also addressed the question of what to do when one part of an unmarried couple qualifies for the $8,000 first-time buyer credit and the other qualifies for the $6,500 credit (which, though it's about repeat purchases, is technically part of the first-time home buyer credit):

Q. How does the allocation provision work when unmarried taxpayers purchase a home together and both qualify for the first-time homebuyer credit under different tests?

A. Co-purchasers who are not married may allocate the credit using a reasonable method. A reasonable method is any method that does not allocate any portion of the credit to a taxpayer who is not eligible for that portion of the credit. The maximum credit for a taxpayer who qualifies under the long-time resident test is $6,500, and the maximum credit for a taxpayer who qualifies under the first-time homebuyer test is $8,000. One example of a reasonable method is to allocate $6,500 to the long-time resident homebuyer and $1,500 to the first-time homebuyer.

Patterson Park gets 'comeback neighborhood' nod

Southern Living magazine is featuring 10 "comeback neighborhoods" in its January issue, and Patterson Park in Baltimore -- which went downhill and then bootstrapped itself up again with the help of a rehabbing nonprofit -- is one of them. So says the Nashville Business Journal.

Other neighborhoods on the list include East Nashville, Springfield in Jacksonville, Fla. and Holy Cross in New Orleans.

You know those retailer come-ons promising 25 percent off your purchase if you open a store credit card? Skip them, FICO says. That's because "opening new lines of credit can hurt your credit score, and may increase your chances of paying your bill late, which can have a very negative impact your credit rating," the company notes.

While you're at it, don't run up big gift-purchase balances on the cards you do have. "Although experts agree having 3-5 credit cards helps your credit, carrying a balance leaves you with a much lower credit score, which could jeopardize your chance of getting lines of credit elsewhere," FICO says.

And it might seem like a no-brainer, but don't delay when the holiday tab comes due. "A single late payment of just 30 days can bring a credit score of 780 down 90-110 points, and a score of 680 down 60-80 points," FICO says.

December 13, 2009

Appealing a property assessment on an off-year

If you know that Maryland reassesses properties once every three years for purposes of taxation, you probably also know that property owners can appeal when they get the reassessment notice in the mail.

But did you know you can appeal on the off-years, too?

It's a "petition for review," and -- as you might imagine -- more people have been sending them into the Maryland Department of Assessments and Taxation since the housing bubble popped. Most people's homes are worth less now than they were a year or two ago, after all.

Deadline to file is Jan. 1 for the following July 1 tax bill. (One exception: If you buy a property in the first half of the year, you can petition to have the assessment reviewed for the tax year beginning that July -- just get your application in within 60 days of the purchase.) Instructions, including appeal form, can be found here. The completed form goes to your local assessment office.

You can ask for a hearing, or you can just ask the state to take another look. Joseph Glorioso, supervisor of assessments in Anne Arundel County, kindly let me take over his office for an hour so I could read a stack of petitions and get a feel for what they're like. Plenty of people simply assert that the assessed value is too high, thank you very much, and sign their name.

But some take the recommended step of offering supporting evidence. One homeowner included a long list of recent sales in his neighborhood and noted that asking prices were even lower than the sales prices.

Here's what the state suggests if you're going to appeal:

* Focus on those points that affect the value of your property.

* Indicate why the Total New Market Value does not reflect the market value of the property.

* Identify any mathematical errors on the worksheet or inaccurate information describing the characteristics of the property (such as the number of bathrooms, fireplaces, etc.).

* Provide examples of sales of comparable properties which support your findings as to the value of the property.

* Avoid the following issues since they are not relevant to the value under appeal: comparison to past values, percent of increase, additional metropolitan costs, the amount of the tax bill, properties in other taxing jurisdictions, and services rendered or not rendered.

The state's petition form includes a warning that an appeal could potentially end with an increased assessment. But Henry Sikorski, state supervisor of assessments, told me that the law doesn't allow that in cases of residential property, only for commercial. (The regulation is here, in case you'd like confirmation.)

Remember, if you don't get anywhere with your initial foray -- and you're sure you're right -- you can appeal the decision to the Property Tax Assessment Appeal Board, and from there to the Maryland Tax Court.

December 12, 2009

City wants to tax 'uninhabitable' homes at higher rate

It started with a proposal from a city resident, leapfrogged to radio and now it's being backed by the Baltimore City Council: taxing owners of vacant and uninhabitable homes at a higher rate than the $2.268 per $100 of assessed value charged to everyone else.

The council passed a resolution Thursday night asking the city's General Assembly delegation to establish a dual rate. Councilman James B. Kraft, who introduced it, did so at the request of Matt Gonter, the above-mentioned resident.

Gonter thinks Baltimore should follow the lead of D.C., which already has a split rate. It's $10 per $100 in assessed value for vacant properties, compared with 85 cents per $100 for other homes. His hope is that the city, by charging more to owners of problem properties, could then lower its property tax rate for all other homeowners, who now face a rate that's more than twice as high as any of the state's counties.

Because Gonter made his proposal here early on, some of you have already weighed in on it.

I wouldn't increase it as high as DC, but I think this idea may actually have a benefit. They'll want to make sure they don't ensnare legitimate owners of vacant properties, such as home builders. However, that invites a potential loophole which could be abused. Hopefully they simultaneously lower residential property tax rates if they do increase taxes on vacant properties. That little caveat needs to be included or this will just result in a money grab.

Don't ignore the unintended consequences of this. Hiking the tax rate on vacant properties could be an invitation for property owners to act more like slumlords just for the sake of filling the property by turning a blind eye to quality of the property, ignoring criminal activity, even inviting in bad tenants just to evade the tax. This isn't the no-brainer it seems like, and although it would ultimately result in fewer vacant properties, it may result in more slumlords and less landlord oversight.

A LOT of the crime that was in my neighborhood was done by people that did not live in the neighborhood and would come in and squat on vacant properties and sell drugs, etc. When people moved into those houses, the criminals moved on, because they don't want to take the risk of someone who cares calling the police on them. I seriously believe the reason for most Baltimore crime taking place in the areas that it does occur is because vacant houses are an opportunity to do things you don't want people to see in an open air fashion.

Gonter can't believe how quickly his suggestion took off.

"I’m grateful for Councilman Jim Kraft offering a resolution in support of my idea of a higher property tax rate for owners of vacant and blighted properties in Baltimore City, and I’m grateful that 10 other councilmen co-sponsored the resolution," he wrote me in an email. "Never in my wildest dreams would I have imagined that what started out as a small Facebook group would turn into a city council resolution in less than a month! The citizens of Baltimore now need to pressure their delegates and senators to introduce and pass legislation that would turn this idea into reality."

The resolution doesn't specify a rate. It asks the city's state delegation to "to introduce and ensure passage of local legislation to enable the City of Baltimore to establish a split-level property tax rate wherein vacant, nonoccupiable or uninhabitable properties would be taxed at a higher rate than occupiable or habitable properties."

The resolution references studies showing that blocks with unsecured vacant properties have more calls to police about drugs, theft and violence, are vulnerable to fire and lower surrounding home values.

What do you think, folks? Thumbs up, down or sideways to this resolution?

If you're in favor of a higher rate for uninhabitable properties, what would you set it at?

Assuming it's not extended again -- and the credit's chief promoter in the Senate swears this is it -- then it will stop being a factor in new contracts after April 30, the deadline to sign.

Then what?

Economist Dean Baker, who warned of the bubble years before it popped, says he expects the market will take another hit soon. He actually expects it before the credit expires, because he thinks the lure of the original $8,000 credit convinced people who would have bought next year to buy this year, thus decreasing next year's pool of potential buyers.

John Burns Real Estate Consulting, which advises the home building and real estate industries (some of you know the firm for its "housing cycle barometer"), is more optimistic. Steve Dutra, vice president of information there, expects modest sales improvement and flat to small decreases in prices next year in the area. (Still, Baltimore does top the barometer list of "areas of affordability concern," calculated by comparing metro areas to their historical norms.)

Kenneth Wenhold, Mid-Atlantic regional director of Metrostudy, another firm that advises home builders, has his own analysis of our area:

He wrote in a report about resales -- the part of the market tracked by Metropolitan Regional Information Systems -- that the Baltimore metro area is finally "beginning to heal." There are still too many homes for sale to allow prices to rise, but the number is falling and contracts are rising, he noted:

"Originally I wrote that we did not expect to see Baltimore tighten up as quickly as Maryland, [but] the last two months of data shows that it has the potential to tighten up just as rapidly, and it seems to be making up for lost time. At this rate, we could see Baltimore, Anne Arundel and Harford Counties at equilibrium by the beginning of spring if this momentum is maintained."

He expects some post-credit "hangover" but thinks it will be better coming in the summer than the usually slow winter.

What's your prediction for the housing market when the tax credit ends?

Do you think, on balance, the incentive will have been helpful, harmful or neutral?

December 10, 2009

November home sales in the Baltimore metro area

Would you like to take a guess how much home sales rose last month -- compared with a year ago -- in the Baltimore metro area? Here, I'll give you choices:

A. 36 percent

B. 63 percent

C. 77 percent

It's "C." ("A" was October's increase.)

That's far and away the biggest increase on record, though of course the record only goes back to the late 1990s when Metropolitan Regional Information Systems started tracking the area. This sure suggests that lots of people were waiting until what they thought was the last minute to get that $8,000 credit for first-time home buyers. (The credit was supposed to expire after Nov. 30. Instead, it was extended and expanded.)

The 2,247 homes sold last month is well above November 2007 as well as November 2008, but it's below previous Novembers on record. (Well below the bubble years, as you can imagine.)

Most deals take longer than a month to close, so presumably a large portion of these deals were struck before November. But the number of contracts signed last month in the metro area was also up -- just not a 77 percent sort of up. The increase was 24 percent over the previous year.

What's standing between you and $6,500? "And"

So the IRS has weighed in on the question of whether you can get the $6,500 credit for repeat home buyers if you meet the length-of-ownership requirements but your spouse does not. The answer is no: You both must have used the same home as your primary residence for five consecutive years of the last eight in order to get the incentive for a new purchase.

This is infuriating to me. It really is typical for our government. Eliminating anyone who's gotten married in the last 5 years. Way to NOT encourage newlyweds (those who are likely to be looking to move into a new house) to move.

Waiting for home sales

Statistics on November home sales and pending deals in the Baltimore metro area are due out today, so we'll see which trend had the upper hand -- the annual slowdown around the holidays, or the $8,000 and $6,500 incentives to buy buy buy.

I recently asked you in a Wonk poll whether you had plans to be in the housing market this winter. Two thirds of you said yes, which might be a bellwether of a busier-than-usual season or just a sign that you only put up with my wonkishness when you're in the market. So who knows. But here's how the poll breaks down:

December 9, 2009

Price reductions on homes near you

Real estate search engine Trulia tracks asking-price reductions among homes listed for sale, and it's been saying for a while now that Baltimore has a lot. Today the company issued new figures, and it calculates our share of homes with lowered prices at ninth-highest among large U.S. cities.

Thirty-two percent of Baltimore homes on the market -- about a third -- have seen at least one asking-price reduction, Trulia says. Average drop: 11 percent.

In Minneapolis, which tops the list, 40 percent of homes have been price-reduced. At the other end is Fresno, Calif., with 12 percent.

Some reductions really add up. The owner of this Canton condo, for instance, is listing it for $400,000 less than the original asking price. Of course, the original asking price was $3.4 million ...

I'm curious whether price drops make buyers more or less likely to check out a home. I know "20 percent off!" can work for retailers hawking clothes, but agents have said over and again to me that it's critically important to set the asking price at the right spot the first time.

Are there second chances in this market? As a buyer, are you more likely to expect further price reductions from an already reduced home than from one that's just hit the market? Or is price history secondary to whether you think the current price is in the ballpark?

And here's the $64,000 question: What do you think about overall prices in the Baltimore-area market now, four years into the housing slump?

December 8, 2009

IRS on who qualifies for repeat homebuyer tax credit

Many -- many, many -- of you have asked whether a married couple can get the $6,500 tax credit for repeat home buyers if one but not both of the spouses meets the ownership requirements. A common scenario is Wonk reader Albert's: "Individually, I qualify as a repeat homebuyer and my wife qualifies as a first-time homebuyer. If we purchase a property together, do we qualify for the repeat homebuyer credit?"

My colleague Eileen Ambrose and I have both bugged, er, politely prodded the Internal Revenue Service to rule on this one. Now the IRS has. Though, as Ambrose puts it, "It won’t make many buyers happy."

The answer is no. A married couple only gets the $6,500 repeat-buyer credit if both spouses have owned and lived in a home (the same home together) for five consecutive years of the past eight and are buying a new primary residence.

December 7, 2009

So when you say "pristine" ...

"Pristine" is a favorite in real estate listings, but here's the funny thing about the word: It could mean so fresh and clean it is (or seems) new ... or it could mean "belonging to the earliest period or state." So technically, the owner of a 30-year-old house with original roof, appliances and shag carpeting could call it "pristine" without a qualm.

This got me thinking about other listing words. Like cozy. Or charming. Or fixer-upper.

What do these words mean to you? What have they turned out to mean in reality?

Buyers, what words are actually helpful to you in deciding whether to go see a home, and which ones do you wish agents would strike from their dictionaries? Or do you ignore the verbiage and just look at the photos?

Sellers, what would you tell people about your homes if you could just have a friendly chat with the potential buyers out there?

December 6, 2009

Real estate listings everyone can enjoy

You might think there's no point looking at online ads for homes if you don't actually want to buy a home, but Lovely Listing begs to differ. Under the heading of "Odd finds in Real Estate Listings," the website shares photographs of -- well -- odd finds in real estate listings.

For instance, this home for sale with a photo showing the vines of a philodendron growing up the wall of the living room. And, in another photo, the ceiling. And in yet another photo, out into the hallway and ... is it going into a bedroom?

December 5, 2009

New year's home-related resolutions

Do you have a 2010 plan to buy a home or improve the one you have? A survey released this week by Move.com, part of a family of real estate sites that includes Realtor.com, suggests that many do.

The survey says almost 18 percent of Americans "want to take the plunge and finally become first-time home buyers." Sixteen percent told pollsters that their priority resolution for next year is buying an investment property. And more than one in three said their top resolution is home improvement.

I'm in the home-improvement-resolution group. What about you?

I felt my eyebrows raise at the thought that 18 percent of Americans want to buy next year for the first time. That's more than half of all adults who don't currently own a home, let alone those who have never owned one. As of last summer, the homeownership rate was just under 68 percent.

December 4, 2009

Foreclosure "shadow inventory"

Some of you have wondered how many foreclosed homes are on the sidelines of the housing market, neither for sale nor in the process of being sold. Lender Processing Services, a mortgage-industry services provider that tracks nearly 45 million loans across the country, says the answer is nearly 30 percent ... of properties in foreclosure for 12 months.

Yikes.

That's "twice the level of the prior year," the firm noted this week in a report looking at data through the end of October.

On top of that, Lender Processing Services said, mortgage holders haven't started foreclosure proceedings on almost 30 percent of loans with at least six missed payments. Two years ago, it was 13 percent. (The Mortgage Bankers Association, seeing similar trends, said lenders are trying to work out modifications with borrowers.)

Nearly 13 percent of loans in Maryland were either delinquent or in the foreclosure inventory in October, according to Lender Processing Services. That's 14th highest in the nation.

December 3, 2009

Despite economy, affordable-housing renovations go forward

Demand might be high for low-rent apartments, but building them is even more difficult than usual these days. Financiers have pulled back. The market for the Low Income Housing Tax Credit program -- an important source of money for affordable-housing developers -- is a shadow of its former self. And it's not as if local government agencies have extra dough to dish out.

That's what Greater Baltimore AHC was up against when it was putting together a deal to acquire and fix up a dilapidated apartment complex in Northwest Baltimore. The group, part of nonprofit developer AHC Inc., is excited that the project came together despite it all.

The two 13-story towers on Violet Avenue -- originally Greenhill Apartments, but renamed MonteVerde Apartments -- are earmarked for seniors and younger residents with disabilities. The apartments cost $30 million to buy and remodel.

Construction will probably be finished next month. To give you an idea of the work involved, here's one of the kitchens before the project began (in a photo supplied by Greater Baltimore AHC):

And here's an "after":

A hallway before:

And a hallway afterward:

"When this property was built in the '70s, it was really built with every expense spared," said Andrew Vincent, director of Greater Baltimore AHC. "It was really just a bare-bones residence. ... We wanted to completely change the look and feel of the property."

The hallways, for instance, struck him as the sort in "the dreariest high school I've ever been in." They were redesigned to instead look like "a high-end hotel," he said.

Vincent said the nonprofit initially tried to buy the property in 2005, which would have been much easier from a financing point of view. Its offer wasn't accepted, but the winning bidder never closed on the deal.

"Finally we signed a purchase agreement in spring of 2007," he said. "We thought we were going to close in first quarter 2008."

Then, as you will probably recall, the housing market tanked, the economy fell into recession and all hell broke loose on Wall Street.

"Basically the tax credit market dried up; public financing dried up," Vincent said. "We had this huge gap in our financing all of a sudden. So we had to completely restructure the financing of the project."

Some of the financing changes were complex -- hello, variable-rate bonds -- and some required players in the deal to do things differently. The seller, for instance, agreed to finance part of the property.

Closing got pushed back to September of 2008 as Greater Baltimore AHC negotiated these changes. That timing made for a lot of last-minute drama.

Vincent said the renovations, once started, were done around residents rather than the sort of fix-up that requires everyone to move out (possibly never to return). Residents had the choice of switching to a rehabbed unit or having theirs rehabbed around them. (Almost everyone opted for the latter, he said.)

Besides fixing up the buildings, the nonprofit added community spaces, a fitness center and an entryway that connects the two towers.

"We're really happy to not only have preserved this housing but also to have completely transformed what it was," Vincent said.

December 2, 2009

A homebuyer tax credit Q&A

The Sun's lovely Consuming Interests blog held a Q&A on tax credits with IRS spokesman Jim Dupree, and -- as you might expect -- he was overwhelmed with questions about the $8,000 and $6,500 credits for home buyers.

If you missed the live chat, you can read the questions and his answers here. (He notes that he's still waiting for a decision on whether spouses are eligible for the $6,500 credit if one qualifies as a repeat buyer and the other doesn't.)

Here's one answer that might surprise you:

Nicole: My husband and I bought a house in June '09 together. Both of our names are on the deed. As of right now, we don't qualify for the home buyer tax credit due to joint income limitations. If we file married separate, his stand alone income qualifies for tax credit. Can we do this?

Jim Dupree: Yes you can, Nicole, but bear in mind that married persons filing separate returns only qualify for half of the maximum credit amount.

Home sellers, please don't do this

I stumbled across this Craigslist ad for a Pennsylvania home near the Maryland line, and I was amused/appalled to see how the asking price was presented:

In the headline: "$141900 / 3br - *After $8,000 FTB Rebate!"

In the first sentence of the listing: "$141,900 MAY BE YOUR NET COST AFTER FIRST TIME BUYERS TAX REBATE!!* *You must verify the amount of tax rebate you qualify for with your tax preparer."

The actual asking price -- $149,900 -- doesn't appear in the ad until the eleventh sentence.

Now, I understand a seller's inclination to point out that first-time buyers are eligible for eight grand back from Uncle Sam. But do we really want the housing market to sound like a "$69.99 after mail-in rebate!!" printer advertisement?

Dispatches from the home-buying front: Part III

Here's Part III of Arrabal's home-buying tale, the final dispatch -- thus far -- of a head-spinning experience:

---

Bankruptcy is ridiculous. Foreclosure is crazy. The state of Maryland is a little wacky.

One of the previous owners of the foreclosed home my girlfriend and I were trying to buy had filed for bankruptcy after he had been evicted from his house. In a few states (including Maryland, of course), the bankruptcy overrides the foreclosure and an automatic stay-put order is in place. At least, that's what the lawyers said.

No one had lived in the house for more than six months. No one lives there now. How could this happen? Why would they want this to happen?

The title agency said this was "routine" and would delay us seven to nine weeks. Instead of Dec. 11, we would close in February. Maybe.

A bankruptcy attorney would need to go to court to get a judge to lift the stay. File a motion, get it approved, sell the house.

We weighed our options. We could get out of the contract and get our earnest money deposit back, but we'd already sunk just shy of $1,000 into the inspection and appraisal, not to mention the time and effort in our five-offer search.

We waited. And waited. Finally, we contacted the title lawyer again.

There's a new problem, he said. The bankruptcy was actually finalized and closed sometime between the foreclosure proceedings and now. We're looking at another 12 to 14 week delay, he said. Let's try to close sometime in March, maybe April.

There's really no way to describe how we felt. First it was anger, then it was just questions and more questions running through our heads.

How could no one have noticed he filed for bankruptcy? Why does he get the house back after it had already been foreclosed? How did Wells Fargo list the house for sale when it knew it didn't even own the place yet? Is there anything we can do? What about our daycare spot? Where are we supposed to live until then?

Court records show that the foreclosure was ratified on Sept. 11. Recently, the foreclosure file was closed after the auditor's report was ratified and finalized.

Yet still, nothing is moving. We've written letters to Wells Fargo. We've written letters to the listing agent. We've called and e-mailed the title agency. As a previous Wonk reader did, we even wrote to our Congressman. Our agent is baffled. Her broker is baffled. Our lender is confused. If we wait any longer, we're going to need to re-do the entire loan application.

And so here we are. Waiting. And waiting. And waiting, and not really knowing what is going to happen next. The attorneys say they need to file two motions, one to re-open the bankruptcy and one to have the stay order lifted. For some reason, each will take about seven weeks.

I interact with many attorneys at my job. I've told them the story, and the answers have been surprising: Some say this makes no sense, others say it's plausible. One even said that this could only happen in Maryland because of screwy bankruptcy and foreclosure laws.

And yet, all that we can do is sit here and wait. And hope, and pray.

While we've waited, the four other homes have all closed.

Offer 1: Listed at $199,000. We offered $206,000 and asked for 3 percent seller help. They accepted an offer for $208,000 with 4 percent seller help. We were outbid by $140 net.

Dispatches from the home-buying front: Part II

Ellicott City resident Peter Arrabal, 22, is trying to buy a house with girlfriend Karen Parlee. And as he related for us all on Monday, getting something for $206,000 or less in Montgomery County hasn't been easy.

Today he shares Part II of his tale, which picks up after they'd made several offers -- most on foreclosures -- to no avail.

---

Four offers written. Four offers denied. There were almost 80 houses in our file of previously viewed homes. We had started in late August and it was now early October.

We went out once more. Out of five we saw that October Saturday, we liked one townhouse. Another odd neighborhood: The street names were Starboard, Portside, Sternwheeler and Sloop. Who comes up with these things?

It needed some work, but the location was perfect, and it had a big deck and a big back yard. There was real hardwood flooring throughout the main level.

Offer in. The agent called: The bank wanted our highest and best, and wasn't taking any more offers. We held fast at $31,100 over the listing price.

Shortly after that, our agent called us: Success! The bank, Wells Fargo, had accepted the offer, but wanted to push our closing date back from Nov. 18 to Dec. 11. We would miss the tax credit, but at this point, who cares? We got a house!

We signed the counteroffer, scheduled our inspection and appraisal, and updated our now out-of-date loan application.

The inspector came and did a wonderful job. He spent three hours combing over the 1,600 square feet of the home, plus the deck and the outside of the building. He pointed out every minor flaw and every feature, big and small, about how the house worked.

There were some negatives: Only three of the four burners on the stove worked and the oven door was broken, so we would have to replace the range. The deck needed some repairs done and would need replacing soon. There were no deal-breakers, though.

We spent a few days searching for day care for our infant daughter. We found one and put down a deposit with an awesome in-home daycare. They would hold the spot until the end of December.

Our lender sent out the appraiser a week later. The appraisal report was devastating: In order to get the FHA-backed loan, changes had to be made. Changes that would cost about $3,000, the appraiser said.

Our agent was livid. Our lender was baffled. The appraiser had put things on the appraisal report such as "the carpet has exceeded its economic life" and "puddle of grease in the oven." No mention of the broken oven door, though. Neither the agent nor loan officer had seen anything like this before. The appraised value was well above our offered price, but the "livability" of the property was in question.

They suggested we ask the bank to make the changes, even though we had repeatedly signed that this was an "as-is" sale and that we wouldn't ask the bank to make changes. We had some leverage, though. The appraisal is binding for six months, our agent said. If we back out of the sale, and the bank tries to sell it to someone else with an FHA loan, the appraisal stands and the changes still have to be made.

While we waited for their answer, things got worse. The title agency had "performed a routine records search" and found the previous owner had filed for bankruptcy.

What? The lender couldn't have done that before? You know, like, before it listed the home for sale?

We were now in a "post-foreclosure bankruptcy" situation. The bank didn't legally own the house.

Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
• Baltimore Sun articles by Jamie